Thursday, September 13, 2007

The Five Year Plan

Now, many of you, seeing the title may have been led to believe I was going to be commenting on your college career (perhaps it should have been titled the Seven Year plan) or was reminiscing about the old Soviet strategic planning models. Well, fortunately for you, gentle reader, the Five Year plan I'm going to write about today has more to do with the commitment to become an innovative firm, rather than any Soviet era planning approaches. Hopefully, the concept will also have more validity.

Most people want things when they want them (like right now). So, when we embark on an innovation project, inevitably one of the first questions is: when can we get some innovation results? Well, frankly that depends a lot on your culture, your approach, your decision making capabilities and the number and breadth of good ideas that already exist. Starting from scratch, it will be hard to deliver a lot of "innovation" very quickly.

In fact, if you consider it carefully, this makes a lot of sense. Becoming more innovative requires a cultural change, and consistent emphasis across the organization. These kinds of initiatives don't happen overnight. Additionally, no matter how quickly you generate ideas, they still have to be evaluated, compared to existing products or services, and pushed through a development process. And, concurrent to all of that, you've got to continue to run your existing business.

What I like to recommend is a three to five year effort, to roll out a reasonable, rational set of actions that will move the firm gradually but inevitably to becoming more innovative. Let's take a look at the actions and how they break down over time:

Year One

Identify and train a small working team
Initiate some brainstorming
Communicate the intent to become more innovative and indicate key areas for strategic growth
Start defining and implementing a consistent process

Year Two

Start gathering trends and analyzing them
Start a training program to train individuals outside of the innovation team
Begin implementing ideas that were generated in the first year
Start measuring the innovation process
Gather and report an innovation pipeline or portfolio

Year Three

Produce a new product or service based on the early ideation work
Begin the work to implement new disruptive or "white space" ideas
Implement programs to recognize and reward people for innovation
Demonstrate the success of the process by launching innovative new products or services
Evaluate actuals to plans for early incremental ideas

Year Four
Launch a disruptive idea that was generated two or three years ago
Identify the final locations or processes within your culture that still resist innovation
Tweak your innovation processes and goals
Demonstrate the capability to produce consistent incremental innovations

Year Five
Demonstrate consistent innovation achievement across the organization
Recognize individuals who have consistently innovated
Demonstrate to the firm and the market the consistent benefits of innovation leadership

You may quibble with some of these actions and this timeframe. That's OK. Some firms may be able to mature their innovation capabilities and culture more quickly. However, for most firms I doubt this can be done in less than three years unless the firm is in very difficult straits and aligns completely to innovation focus from the outset.

The most likely path for most firms is:

First year - tinkering with ideation and brainstorming in a few select areas of the business
Second year - implement a central team and start defining a consistent innovation process
Third year - work specifically on changing the corporate culture to embrace innovation and start generating and evaluating disruptive ideas

It's rare to find many firms that will, from a standing start, embrace disruptive ideas and change a corporate culture to become more innovative. Senior executives recognize the challenges embedded in changing a culture too quickly, and creating too much distraction from the day to day operations as well.

So, what does this mean? It means that your firm needs to make an early decision when focusing on innovation. It is relatively easy to tinker at the margins and gain some measure of incremental innovation success. However, low risk will generally mean low rewards and little change to the organization. It is much more difficult to create a long term consistent innovation focus and get corporate wide buy-in to becoming a consistent innovation leader. Before you embark on an innovation effort, make sure everyone understands the commitment level and timeframes associated with the change.

While your management team may want innovation "now", they WILL BE disappointed with the results if they aren't willing to make a long term commitment.
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posted by Jeffrey Phillips at 8:31 AM


Blogger Grant said...

Pick the low hanging fruit

Most managements will not accept a 5 year plan so you have to deliver some results faster. As part of your startup you need to find the 'almost ready' ideas that are hiding out there and bring them to fruition. The challenge lies in producing some successes and using the "failures" to showcase your new system and encourage more risk taking.

1:50 PM  
Anonymous @Stephen said...

I like the strategy, very thorough. I agree with Grant in that no one can operate on a five-year plan in business anymore. If they ever really could.

What about a 5-Quarter plan? Also the "Year Two" subroutine should be re-run every subsequent year/quarter, creating multiple streams of innovation. A "round", if you will.

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